The Sabotaging of the American Economy

Where are going? How did we get here? What could happen next?

Here is a few comments by Dr. Robert McHugh in his article called The Sabotaging of American Economy. See link for complete discussion

Since 2000, the US economy has been managed differently than in the past. A top-down approach (or Central Planning approach) to economic stimulus became the policy.

By top-down, it has pretended to stimulate the real economy by flowing capital down from a few large money center banks, rather than a bottom up approach where money flows from households up to small and large businesses, and eventually toward large money center banks and then local, state, and federal governments in the form of tax receipts.

The bottom up approach, was the economics of Kennedy, of Ronald Reagan, and to a lesser extent, of Bill Clinton, largely thanks in Clinton's case to the Contract with America bottom up economic revolution of the 1994 Congress.

We entered the age of economic oligarchy in our nation, and it started in a big way in 2000. The shift that took place was to equate the economy with Wall Street. Main Street was no longer considered the key cog determining economic growth. Wall Street, mega-money center banks and mega corporations, were considered to be the relevant drivers of economic prosperity. If Main Street benefitted, great. But if they did not, so be it. The goal was to make sure Wall Street financial firms made big money. Bigger was better. Industry consolidation was considered a good thing where mom and pops were bought out so the mega firm could control local markets. If a few large firms could control commerce, the government could control all commerce through partnering with the few mega-firms. As this incestuous relationship grew throughout the decade, it became increasingly unclear whether it was government controlling the few large firms, or the other way around. It hasn't mattered whether a Republican or a Democrat occupied the White House, the same top-down economic policy has been enforced since 2000. The mantra has been, simply, if it is good for Goldman Sachs, it is good enough for everyone. Obama was elected to change all this, but has done just the opposite. His administration and Congress have taken the Master Plan to new heights, to Central Planning. But the question remains, is Obama leading or is Goldman Sachs, AIG, et al? Trillions have been spent to fix this economy, but all that has been fixed is Goldman Sachs and the rest of the Corporate Oligarchy running this country. Targeted economic stimulus programs have been an abject failure, such as cars for clunkers, the token $10 a week drop in income tax withholding requirements ...

The results of the current policies of over the past 10 years - the fundamentals:
- The US federal deficit could approach $2.00 trillion dollars this year, 15 percent of GDP.
- Construction Spending fell in November for the 7th month in a row,
- 1.43 million bankruptcy filings in the U.S. in 2009, a 32 percent increase
- Jobs ? - 27 million people, or 17.6 percent of the labor force, were either unemployed or involuntarily stuck with part-time jobs
- The average workweek came in at 33.2 hours, near record lows

What has worked?
- Goldman Sachs is slated to earn about $10 billion in 2009, with Citicorp already showing $6.0 billion for the first nine months of 2009, and even Bank of America doing fine, thank you ma'am at $3.0 billion for the first nine months of 2009
- The Central Planners' policies have in fact worked!..... for the big boys.

Investments - stock market results during past 10 years
- Dow Industrials remain down 8.25 percent
- S&P 500 remains down a whopping 24.1 percent
- NASDAQ Composite remains down a huge 43.69 percent

Monetary Policy
- Money supply has increased 4 times over the decade to achieve this
- The US Dollar lost half its trade weighted value

Given that the government policies for past 10 years has failed, the article then discusses what needs to be done which is to change the approach from top-down economics to bottom-up. In addition, the article goes on to review the current technical market conditions.


For the complete article see

The Sabotaging of the American Economy